Why A Music Tax Is A Bad Idea

from the let's-go-through-the-details dept

We already had a post discussing how we find it troubling that Warner Music has not been more open in discussing its proposed "voluntary license" plan. It was a neat little rhetorical trick by Warner to claim that we weren't being fair in slamming the proposal so early, when the company itself had kept the plans secret all along. Would they have preferred until they rolled out the "completed" plan for us to point out its problems?

Either way, while we discussed why it was a bad plan in our original post, some are not convinced it's a bad plan. Matt Asay, over at News.com gives his qualified support for the plan, while Nate Anderson at Ars Technica pretty much takes Warner's party line that we're being unfair in criticizing this idea before it's had a chance to air out. Of course, Anderson conveniently skips the fact that Warner wasn't letting the plan air out. These discussions were being held without important stakeholders, where key problems with the plan would not get discussed. Besides, given how many times the major record labels have come up with new great plans that actually made life worse for consumers, I would think the industry has to earn the right to be given the benefit of the doubt. We've been fooled too many times.

Anderson also mischaracterizes our position greatly -- first claiming that we're only kicking the plan because of our "knee-jerk churlishness" and need "to jackboot the music industry in the proverbial groin every time it comes up with a new idea." That makes for nice prose, but pretty much ignores any substance behind our position. In fact, Anderson seems to claim the only reason we dislike the plan is because we called it a "tax" insisting that was the "sum total" of our analysis. This, of course, is untrue -- and Anderson and his co-authors at Ars Technica are well aware of the more than a decade we've put into analyzing music industry business models, including cheering on good models (and even cheering on the big record labels when they do something right). Why Anderson and Ars Technica chose to misrepresent all of that (while throwing in some unwarranted insults), I do not know, but I'll take the blame, and suggest that perhaps we did not explain our position clearly.

So, I'll try again.

Why A "Voluntary License" Is A Bad Idea

Yes, the industry gets upset when anyone calls this a "tax" so I'll use the "voluntary license" term, even though tax is much more accurate. A true voluntary license wouldn't require everyone having a certain provider to opt-in, but that's exactly what this plan would require. In fact, as the slides indicate, eventually it would basically require all ISPs to "opt-in" forcing all of their members to "opt-in." Suddenly, everyone has to pay. That's not a voluntary license. It's a tax.

However, even if we step back and pretend it's really a voluntary license, and even if we grant the premise that all record labels sign up for this plan, you've still created a mess that doesn't help anyone. First, you have to set up a huge bureaucracy to manage this process -- and it is quite a process. You need someone to monitor everything that's happening online to determine whose music is actually being shared and played. You have to somehow create methods to accurately determine -- from the biggest to the smallest -- who actually deserves payment. And, if you don't think that process won't be gamed, you apparently just got on the internet in the last year. As soon as there's the ability to get paid out just because more people are sharing your music, just watch the games that folks take to make sure they get a larger cut. The system will punish honest artists, and reward the scammers.

Next, you have to set up another bureaucracy in charge of managing all of this money, and figuring out how to dole it out (while keeping a cut for itself). Even if this operation is, as planned, a "non-profit" -- don't think it will be cheap. You're talking about a huge operation that is tasked with determining how much money every musician in the world is owed, and then trying to get that money to them. Given the recording industry's history with not being able to "find" some big name musicians, just take a guess how well this will work here? Instead, there's a better than even chance that eventually, the big record labels will note that it's "easier" and "more efficient" for this "third party" bureaucracy to just send a big check to the labels each month, and let them dole out the money to their artists (after taking a cut, of course).

And, of course, there's the whole question of what the rules will be for determining how much each artist will make. Over the summer, we had a look at the sausage making process for compulsory licensing, and it's not pretty. Basically, you get backroom deals combined with senile "copyright board" judges who don't understand the marketplace or technology making final determinations on exactly how much every action is worth. We've already got too many different compulsory licenses to count. All this will really be doing is adding yet another one to the list. It doesn't simplify things -- it complicates them even more. The recording industry, of course, loves that complication. It lets them come in and "handle" things, which most of the time means twisting the rules to its advantage.

Yes, the EFF and Public Knowledge favors some form of "voluntary license," and Warner Music and Griffin are quick to play that up, as if their plan has won some kind of public approval. But the reality is quite different. Someone from Public Knowledge was quick to show up in our comments (where Warner Music still fears to tread, for some reason) to point out that they have not endorsed this plan, but are open to discussions on it. The EFF has also been cautious, noting in the past that it does not support a license that is called voluntary, but is really compulsory. In the end, though, I simply disagree with the EFF on the benefits of any sort of licensing plan. Fred von Lohmann once explained his support to me as such: "A voluntary licensing plan basically gets the issue off of consumers, and lets everyone else fight it out in court."

That sounds nice, but ignores the unintended consequences. The big record labels have shown over and over again that they can twist the process to their advantage. So while it may be true that consumers won't be getting sued any more, it doesn't mean they won't get screwed. The plans will weigh heavily to the advantage of the established recording industry with its leverage in the space. It's a really, really sad situation that we should feel like rewarding the industry for its decade of actively fighting against progress by saying "well, phew, as long as you agree to stop suing, here's as huge chunk of money."

Have you noticed a pattern here? What you're doing is setting up a big, centrally planned and operated bureau of music, that officially determines the business model of the recording industry, figures out who gets paid, collects the money and pays some money out. The same record industry that has fought so hard against any innovation remains in charge and will have tremendous sway in setting the "rules." The plan leaves no room for creativity. It leaves no room for innovation. It's basically picking the only business model and encoding it in stone.

Oh, and did we mention it's only for music? Next we'll have to create another huge bureaucracy and "license" for movies. And for television. And, what about non-television, non-movie video content? Surely the Star Wars kid deserves his cut? And, newspapers? Can't forget the newspapers. After all, they need the money, so we might as well add a license for news. And, if that's going to happen, then certainly us bloggers should get our cut as well. Everyone, line right up!

This is a bad plan that will create a nightmare bureaucracy while making people pay a lot more, without doing much to actually reward musicians.

And, worst of all, it's totally unnecessary.

So What's The Alternative?

But then, as people will be quick to note: what's the alternative? If we don't do this, then how will musicians get paid? This, of course, is a logic fallacy that assumes incorrectly that musicians only make money from the direct sale of music. Musicians that are already embracing business models based on a solid understanding of information economics are discovering they can do quite well (almost always better than under the old model). And, yes, this applies to both big and small musicians.

The basics are pretty straightforward, and if you're new here, you should follow the links to understand them more thoroughly. But musicians get to use their already-created content, which are effectively infinite due to its digital nature, to grow the market for all of the scarcities that surround them. This can include physical goods, but the bigger money is in non-tangible scarce goods that simply can't be copied: access to the musicians, seats at a concert, the ability to create new music and many other opportunities that have the side benefit of more closely tying fans to the musician. And this doesn't need to be complicated. You could set the whole thing up as a subscription fan club with different levels providing different scarce benefits -- and everyone wins.

The simple fact is that these business models are already working for many, many musicians. Hardly a day goes by where someone doesn't show us yet another example of musicians creatively coming up with new and unique business models that embrace these economic principles, and which allow them to make even more money than they did in the past. And, yes, there's still room for the record labels if they want to act as true partners, helping musicians implement these business models and enabling musicians to better connect with their true fans.

Of course, that involves some work. It involves a real change in how business is done. It may not be as easy as a plan that lets the record labels sit back and collect large sums of money with promises to distribute it, but it can be a lot more profitable for everyone in the long run. It's more efficient. It allows true competition to take place in the marketplace, rather than letting the market set the winning model. It lets people share music without worry of a lawsuit (in fact, if the business model is implemented correctly, it gets musicians to encourage more file sharing as it helps build up a larger audience for those scarce goods). Without having to fund those huge bureaucracies, there's also much more money that can go to the actual artists as well. Plus, fans feel better knowing that their money actually is supporting the artists, rather than a central bureaucracy.

But the important point is that this plan is working today for many different players in the music world, including some smarter labels and (most importantly) the fans. The only ones it's not working for are the big record labels who have refused to recognize the opportunities -- and the bands that rely on those labels for guidance. We shouldn't be setting up a system to reward those folks, just as everyone else is figuring out how to succeed.

Let The Market Work

Jim Griffin and Warner Music have been working behind closed doors, trying to craft the perfect business model that preserves their business. During that same period, a large number of folks have been out here, actually involved in an open conversation about business models that are working today. We've seen artist after artist learn (on purpose or accidentally) how to embrace these concepts and how to succeed beyond anything they ever saw in the past.

Let's not kill that off with a plan worked out in the backrooms that will almost definitely have significant unintended consequences. Let's let the market work its magic transparently.

Griffin's complaint about our post (delivered via Warner Music) was that it was unfair of us to criticize a plan so early in the planning stages. We made no such complaint here when we first laid out these discussions so many years ago. We encouraged people to criticize and discuss the plans -- and for people to test them out. That resulted in more discussions and more experiments and adjustments and we're seeing the end result of that now -- with many, many success stories. Griffin's plan allows for no such experimentation. It's an all or nothing plan, and if you accept it as currently laid out, you're going all in when half the rules of the game are being established without the players' knowledge.

That's a bad, bad bet.

If Jim Griffin wants us to hold back on criticizing his plan, why can't he and Warner hold back on implementing their plan that effectively blocks out the market forces that are already succeeding?

Why is it the government's or society's problem to make sure any group gets paid?! How do lawyers get paid? They get clients who are willing to pay them. How do factory workers get paid? By getting factory owners to employ and pay them. How do secretary's get paid? By getting businesses to employ and pay them. Are there any mandatory licenses required to ensure the vast majority of employees get paid? Nope. They're willingly paid because they perform a service worth paying for.

To prove my point, how come know one cares about how bums will get paid? I'll answer that, because the vast majority of people think bums should not be paid because they offer no value or service worth paying for.

The exact same thing is true of musicians, buggy whip manufactures, and alchemists. If society refuses to pay them, it necessarily follows that society has determined their services are not worth paying for. And most importantly, it is not society's duty to enact and enforce laws to compel payment.

If anyone thinks musicians should get paid, nothing is stopping them from making such payments to musicians. The problem is that because they think musicians should be paid, they further think that laws should be written to force everyone else to pay.

Re: back to square one

Ima Fish:
based on your logic, we should stay with todays version: Those who find value in new music being created, pay for the music they consume.
Those who (like you apparently) do not see value in music, do not need to consume music, and should not need to pay for music.

Easy solutions

I think the record industry knows exactly how to solve these major problems with implementing this plan. How much to collect? As much as the market will bear. It need not have any relationship to reality. How much to distribute to artists? The smallest amount that will keep them from getting sued too often. Zero if possible. Suddenly the huge bureaucracy becomes much simpler (though it will still be huge to justify its cut). Their only question is how to keep everybody from finding out this is their plan.

Re: Re: Easy solutions

The problem with forced licenses is that's impossible to really know how much the market will bear.

What I mean by that is an amount just under what will cause "customers" to say "F you, I'm not paying for the license and I just won't listen to your music anymore (or I'll pirate it)." Until the price reaches that point, it isn't too high in the RIAA's view. Seems that way to me anyway, I'm putting words in their mouths in a big way. The problem is this is only possible if it's really a voluntary license, which doesn't seem likely. If it's compulsory, then they can charge whatever doesn't cause ISPs to go out of business.

Re: Easy solutions

How much to collect? As much as the market will bear. It need not have any relationship to reality.

They will probably say iTunes costs $1 per song but this is too cheep (they've maid this complaint before) so say $2 per song. Then they will calculate how many songs are downloaded add say 10% for variations in this and charge the $2 per every song downloaded (+ administration costs), split up among the people taking the "voluntary license" - or maybe to start with they will just use the average per internet user, but when most people/ISPs have signed up you can be sure they will increase prices to pay for the "free-loaders" who aren't paying for the "voluntary license".

And yes you're right, it doesn't bear any relation to reality

How much to distribute to artists? The smallest amount that will keep them from getting sued too often. Zero if possible.

They will probably follow standard procedure and spend as much of the artists cut as possible (preferably all) in advertising the "voluntary license" and lobbying to have it enshrined in law (if it isn't already by that point).

Re: Re: Easy solutions

Do you know what ASCAP and BMI do? They are non-profits that distribute money to artists/songwriters. They do it pretty well too. While I am not in the favor of a music tax I do not think you attack a non-existent non-profit, because the present models, ASCAP & BMI, the music industry is using is fairly efficient. Does that justify a music tax? No. Just think before you regurgitate Mike's points.

Re: Easy solutions

a more annoying problem

There is another more subtle and annoying problem, one that I would make a personal mission to make. If this "voluntary license" is forced on me by Comcast (you know it will happen), I will show them and the RIAA what a 250G cap is really all about. Same with a Movie, TV, or video tax.

Great summary

You can't repeat this following section enough:
"Oh, and did we mention it's only for music? Next we'll have to create another huge bureaucracy and "license" for movies. And for television. And, what about non-television, non-movie video content? Surely the Star Wars kid deserves his cut? And, newspapers? Can't forget the newspapers. After all, they need the money, so we might as well add a license for news. And, if that's going to happen, then certainly us bloggers should get our cut as well. Everyone, line right up!"

This type of intervention will cause innovation to grind to a halt. Look at banks and auto makers, once the government mentioned the word "bailout" the companies decided it would be easier to beg for a bailout instead of working or innovating. This seems to be eerily similar to me. Once this 'tax' can be levied on behalf of music companies the same will happen with every other media imaginable.

These taxes will probably have to extend far beyond ISPs now that people can download content over cell phones and 3G connections or anything with a data plan.

The labels will collect a tax for entertainment? That makes no sense. Where's the incentive for breakthrough artistry? Will there be incentive for pushing the artform forward? No, because for all intents and purposes, it's subsidized.

I think the labels would get entertainment by collecting the tax-- Entertainment in the form of laughing all the way to the bank.

Re: RE: "Doesn't bother me, I pirate all my music anyway"

I believe that the vast majority disagrees with this idea.

If someone recommends something to me, I'll venture out for some samples and take a look. If it's crap, I delete it, shake my hands of it, and say "Well, good luck with that." Conversely, if someone recommends something that is of high quality, I will go out and purchase it. Understand I'm lazy most of the time and don't want to transcode the media so it works on the iPod. Thusly, I'm usually limited to iTunes.

But if I can get it on my iPod, I will pass it around and let people watch/listen like there's no tomorrow.

So when you mention thesmile on friends faces when I bring my HD over for them to copy what they want.

In some ways, I can agree... But it's easier to pass around an iPod at work and have that experience convert into either
1) More viewership on network TV
2) More downloads on iTunes
Than it is to bring the HD into work where it can't be viewed or enjoyed.

"REMEMBER, IN THIS ECONOMY, SHARING IS CARING"
That's a cop-out excuse. Your probably in a bad job, or still in school. Have you considered pursuing an MBA?

What do you think about...

Mike:

Interesting write up. I would like to move the conversation to another topic with a similar proposal and would like to know what your opinion is.

I have heard a couple of proposals that we should change how pharmaceutical research is funded, with the goal of eliminating patents. The two proposals I have heard are to either have a progressive income tax that will be doled out in some fashion to various organizations conducting pharmaceutical research or to add a [regressive] tax to all prescriptions [both brand new drugs as well as generics] to pay for pharmaceutical research.

I was thinking of these plans when I saw your comments because it seemed that many of the problems you pointed out with bureacracy and how much seemed applicable to any proposal where distribution of money was handled by an organization uninvolved in any sort of actual output of anything.

Just so you understand my position, I am opposed to any sort of income tax or tax on pharmaceuticals that would then be doled out through an inefficient, politically influenced, government bureaucracy. Regardless of your opinion of patents, replacing a system with problems with a system that will be a disaster hardly seems an improvement.

i want a "piracy pass"

i'll do what i've always done since no company can seem to offer a search and download service that rivals oink or the pirate bay. i just want a pass that will stop me from being harassed by the MAFIAA. like, i pay in, register, and when the copytards come knocking they can see my registration and go hassle someone else.

i'd be willing to pay $20 or maybe even $50 a month for that kind of convenience. people that don't want to pay can run the risk if they so choose.

the pass would be voluntary, so people that don't pirate don't have to pay, and the industry already has it's snoops in place to see who is sharing what... they could do what the ASCAP people do and report what is being distributed in order to pay royalties.

this way, the people get left alone, the labels and studios can continue to be corrupt, and the artist will still get screwed. it will be business as usual for everyone involved, only this way i won't get hassled. it's win/win.

I'm always opposed to this kind of idea for many of the reasons listed. When I buy music, I want the artist to get the money. If I was forced to pay this kind of licence, how could I know that the artists I actually listen to and want to succeed, rather than the makers of the American Idol-style crap I despise? The major labels have all been convicted for colusion and price fixing - who is honestly dumb enough to believe they won't do that here?

The way forward is simply but a scary place for these blinkered fools. Stop the lawsuits and the pathetic attempts to regionalise and control the way music is consumed. Stop viewing each download as a lost sale (which it usually isn't, realistically) and discover new ways to monetise the things people do pay for. Allow the free market to prosper and be the ones to reap the rewards rather than trying to force the industry to stay where it was 15 long years ago. It'll never be 1994 again, but that doesn't mean there's not a bright future ahead. It just won't be achieved through taxation and copyright "control".

Fixed Pool Of Revenue

This music 'license' is fundamentally flawed because the revenue is limited to number of licenses 'sold' (i.e. per internet connection). This plan would create a fairly fixed pool of dollars that would be cut into ever smaller slices to pay the artists. You could only grow the pie by increasing the number of paid licenses or by increasing the license fee. My understanding of the ISP market in the US is growth in subscribers is typically at the expense of a competitor so for the pool of dollars it would be a zero sum game. So guess what is the likely answer to growing the 'revenue'? Yeah, let's raise the license fee!

Another problem is for people with multiple internet connections. I have one for my home and a data plan for my phone. Would I be expected to pay a license for both connections? That approach would force me to pay twice for the right to copy music.

Trinkets, Trash and Treasure

Any monkey with a pencil can see that there's an awful lot of technology that has gone mainstream in the past 10 years. But the labels seem to be stuck in a time warp, trying to solve a decade-old problem using century-old subsidize-and-tax ideas. Thing is, the customer has moved on. Technology, if used correctly, has helped artists get promoted and gain the notoriety usually only available via mainstream label marketing and production budgets.

I see this as an answer to central planning snafu the labels got themselves into. A large number of manufactured artists can't have a conversation about the lyrics, or music because the hired help wrote it for them. As such, they probably also lack desire to interface with fans, or use "Trinkets, Trash and Treasure" promotional marketing tools (ie T-Shirts) we've talked about here for some time.

BMI and ASCAP

if BMI and ASCAP work so well, there's no need to create a NEW bureaucracy -- just extend those two services to the internet. The problem is that BMI and ASCAP work well for larger groups/artists, but not small folks. For broadcast, where there's a record of what is played, how many times, and/or what the general size of the audience is, it works okay, but not perfectly. How do you measure that accurately at all with digital file sharing? I'm not a tech-guru; maybe it's easy.

I've read accounts of BMI/ASCAP where the amount of money taken in is simply divided by what they think, based on what records they have, was played the most. Do we have any recording artists on the list, especially smaller, self-published artists? If BMI/ASCAP works to their satisfaction, then go for it. If they are ignored by the main bureaucracy, then we need a different model, albeit one that may be based on their basic approach.

We are all being accused of copyright violation

It appears to be worse than a tax. It is a fine.
What about those that do not d/l media ?
What about the deaf, will they still be able to afford their internet access ?
I see the line forming, there are many who think the world owes them a living and will make any BS that they can sell.

Serious Question:
Will this fine apply to a dialup connection ?
Because I would certainly do that rather than pay a fine for an offense I have not commited.

Re: Re:

On the subject at hand, please correct me if I am wrong, but if I read the presentation correctly it lays out a possible framework and suggests a trial to see if it even is workable.

Assuming that at most schools access to the internet is provided via the schools' networks, logic suggests that potential contractual arrangements be pursued by the two parties in interest...the rights holder and the network provider.

There is, of course, the limitation that the potential arrangement pertains just to music. Mine is just a wild hunch, but could this limitation arise because the "M" is WMG stands for "music"?

Again, the presentation comprises talking points that may lead to a trial to see if it works. It certainly does not foreclose other approaches. Sure, "scarce/infinite" has economic appeal and merit, but at this point in time it has no traction with large content providers.

Re: Re: Re: Re: Re:

You are talking about the groups of people who declare a large blow against piracy every time they got a simple torrent tracker shut down. It won't matter what the other side says, they will declare it a success. That is still disregarding every other reason this shouldn't be done.

As for negotiations, that is what this isn't. Until all consumers and college kids are included at the table, it is not a real negotiation.

Re: Re: Re:

Assuming that at most schools access to the internet is provided via the schools' networks, logic suggests that potential contractual arrangements be pursued by the two parties in interest...the rights holder and the network provider.

With the schools FORCING all students to pay a fee. Do you not think those being forced to pay are important stakeholders here?

There is, of course, the limitation that the potential arrangement pertains just to music. Mine is just a wild hunch, but could this limitation arise because the "M" is WMG stands for "music"?

Uh, did anyone say differently? The point was in explaining why this is a bad idea for those stakeholders (the people who pay) you conveniently ignore. We never said it was WMG's responsibility to include all the others.

You seem to be reaching really deep to support your position here, MLS.

Again, the presentation comprises talking points that may lead to a trial to see if it works. It certainly does not foreclose other approaches. Sure, "scarce/infinite" has economic appeal and merit, but at this point in time it has no traction with large content providers.

So? If it's not getting traction with the large content providers, we should force everyone to pay them? How and in what possible world does that make sense? Because one group of failing and flailing companies can't figure out basic economics, everyone needs to pay them?

I mean... you and I disagree on plenty of stuff, but at least normally I understand where you're coming from. On this one... I don't get it. Are you just making these ridiculous claims for fun?

Re: Re: Re: Re:

With the schools FORCING all students to pay a fee. Do you not think those being forced to pay are important stakeholders here?

Slide No. 4 I think shows that this is not something cast in stone. It is a thorny issue for this very reason, so it is something that needs to be fleshed out more fully.

The point was in explaining why this is a bad idea for those stakeholders (the people who pay) you conveniently ignore.

By this logic potential customers should participate in negoiations between companies and employee unions. After all, customers have a stake in the outcome and, hence, should be stakeholders sitting down at the bargaining table.

Re: Re: Re: Re: Re:

By this logic potential customers should participate in negoiations between companies and employee unions. After all, customers have a stake in the outcome and, hence, should be stakeholders sitting down at the bargaining table.

That's not a case where they are discussing adding a direct mandatory fee for every person, are they?

No. It's not. And, I know you're not that dense to not understand the difference.

Re: Re: Re: Re:

I mean... you and I disagree on plenty of stuff, but at least normally I understand where you're coming from. On this one... I don't get it. Are you just making these ridiculous claims for fun?

I happen to agree with CNET and Ars Technica that techdirt is jumping the gun by throwing cold water on one of perhaps many possible approaches that may hold promise for ameliorating the adversarial situation now existing. Even the EFF has noted it is an encouraging sign. Are they likewise making ridiculous claims for fun? I rather doubt it.

Re: Re: Re: Re: Re:

I happen to agree with CNET and Ars Technica that techdirt is jumping the gun by throwing cold water on one of perhaps many possible approaches that may hold promise for ameliorating the adversarial situation now existing. Even the EFF has noted it is an encouraging sign. Are they likewise making ridiculous claims for fun? I rather doubt it.

Throwing cold water implies it's not a reasoned response (which, I'll note, you don't even bother to respond to).

Actually, talk to someone at the EFF. They have made it clear that they are very much against a compulsory plan, which this is.

Either way, I addressed my differences with EFF in this post.

But, what EFF is saying and what YOU are saying is quite different. The ridiculous claim you made is that because big content providers are unwilling to let the market work, we need to let them co-opt the rest of the industry into a forced agreement. The EFF has never suggested anything like that.

Reasonable people can disagree about the merits of this plan, but that's not what you're doing.

Re: Re: Re: Re: Re: Re: Re:

I see you are still smarting from the criticism leveled at techdirt for jumping the gun.

Huh? What does that even mean?

Here is a radical idea. Let the parties talk and wait to see what if anything results.

Except, as we've pointed out (or did you not bother to read?), the "parties" aren't talking. Important members are being entirely left out.

And, honestly, what sort of crap is it to say that WE can't talk because we need to let OTHERS talk? How incredibly hypocritical of you.

All we're doing here is talking. We're explaining why the deal, as proposed is a bad idea. We're getting that out in the open (something they refuse to do). Nothing in what we do prevents them from presenting a different, better plan. If they must prevent a plan, then hopefully we help drive them in a better direction.

But, for someone to say, that we shouldn't speak up at all, because someone else hasn't decided they're ready to talk is pretty ridiculous, don't you think?

So, here's a radical idea: why don't we ALL talk about it and see what results? No? Why not?

Re: Re: Re: Re: Re: Re: Re: Re:

"When the sum total of analysis consists of lambasting the unfinished plan as some kind of "tax," it's a reminder that some critics won't quit sniping until the industry abandons its plan to make money from recorded music."

Sound familiar?

"Techdirt has some valid points, but it fails to identify the "better, more innovative business models" that would take the music industry forward, either in this article or in the others to which it refers."

In fairness, this quote was in reference to the original article. In this article a model(s) is put forward, but once again depends entirely on the scarce/infinite distinction, a distinction that is problematic in many applications.

Re: Re: Re: Re: Re: Re: Re: Re: Re:

Sound familiar?

Other than being an entirely incorrect statement, what's your point?

In fairness, this quote was in reference to the original article. In this article a model(s) is put forward, but once again depends entirely on the scarce/infinite distinction, a distinction that is problematic in many applications.

Uh. And what, pray tell, is "problematic" about basic economics?

I'm not sure what your point is here in repeating incorrect claims against what we have said? Have you really reduced yourself to a garden variety comment troll now?

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

Someone has come up with a possible approach to try and address the adversarial relationship between content providers and internet/network service providers. No declaration is made that it is set in stone. No declaration is made that it will even work. No declaration has been made as to who will pay and how much. It is a simply a set of talking points that may lead to a trial to see if it is even viable.

The point to be made is simply that your original post added nothing to the conversation other than declare it was basically dead on arrival. It is as if you are unable or unwilling to even consider any view other than one based upon your economic advocacy. You seem to view the conduct of business in the context of black and white, devoid of subtle shades of gray. This is likewise the case concerning your views of law.

Why not cut people some slack and let them try to grapple with the issues before launching into a "you are wrong and I am right" lecture. Who knows? Maybe they will surprise you and come up with something that holds promise. The guy at Ars Technica was spot on. It is easy to criticize. It is another thing to try and do something about an issue that adds substance to a discussion.

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

Someone has come up with a possible approach to try and address the adversarial relationship between content providers and internet/network service providers. No declaration is made that it is set in stone. No declaration is made that it will even work. No declaration has been made as to who will pay and how much. It is a simply a set of talking points that may lead to a trial to see if it is even viable.

And it was presented without important stakeholders. So we responded by bringing it out in the open, and addressing why we believed it was a bad idea.

What's wrong with that?

The point to be made is simply that your original post added nothing to the conversation other than declare it was basically dead on arrival.

That's simply not true. We explained *why* it was a bad idea. We're open to better ideas, absolutely.

It is as if you are unable or unwilling to even consider any view other than one based upon your economic advocacy.

That's not true. We're absolutely open to other ideas. But if they don't make sense, then we're going to say so.

You seem to view the conduct of business in the context of black and white, devoid of subtle shades of gray. This is likewise the case concerning your views of law.

Once again, not true at all. As we have explained, repeatedly (directly to you, in fact) the whole reason we host an OPEN blog that allows for an OPEN conversation is to consider and discuss these ideas.

If we were unwilling to consider ideas wouldn't we not allow conversation? Wouldn't we have these discussions without important stakeholders? Wouldn't we be involved in backroom dealing... Oh wait, that's what Warner's been doing...

Why not cut people some slack and let them try to grapple with the issues before launching into a "you are wrong and I am right" lecture.

I'm honestly confused by this statement. You are saying that I should not speak my mind about a bad idea?

Who knows? Maybe they will surprise you and come up with something that holds promise.

If they come up with something that holds promise I will be the FIRST person to celebrate it. The problem is that this idea DOES NOT hold promise. It's a bad idea. And it's ridiculous for you to claim I should shut my mouth until THEY decide its okay for me to speak.

It is easy to criticize. It is another thing to try and do something about an issue that adds substance to a discussion.

I HAVE added to the discussion. I explained why this plan is bad. In rather great detail, I should add.

What have you added to it?

I still don't understand where you are coming from. Can you explain one thing to me: why should I not speak my mind? Are the folks at Warner so fragile that they can't take constructive criticism for why their plan is a bad plan?

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

Thank you for a response that does not turn personal. I appreciate this very much.

It is useful to note that we are talking about two separate articles, the original with the slides and this. The "cold water" comments have all been directed to the original. It was in this article that detailed information was presented.

It is also useful to note that this particular matter is extremely limited in scope; how to go about reconciling the interests of content providers and internet/network providers who to date have been performing a dance around the DMCA "Maypole". Content providers are upset that content is being uploaded/downloaded illegally. Internet/network service providers are upset that they keep receiving takedown notices and have to do something if they are to enjoy the benefits of a safe harbor.

I know you have very strong views concerning business models based upon the scarce/infinite distinction. While the distinction is relevant and makes economic sense (even to me), I cannot with certainty state that it is a panacea simply because there are far too many industries and variables for its ramifications to be understood. One example that readily comes to mind relates to software companies whose lifeblood depends upon the creation of digital content and its distribution. A company like Adobe seems to me to fit within this group. It is not at all clear just what scarce goods application software providers have than can benefit from the free transfer of their digital products.

What troubles me as I think about how such companies might benefit is that your approach seems to mandate that they expand into additional lines of business beyond just digital content. The approach, at least to me, suggests either they merge with hardware and/or service providers, or
perhaps that they move their content to an on-line offering. While this has been demonstrated as viable in, for example the gaming world, it leaves users in a very difficult position. For example, Adobe recently toyed with the idea of an online version of Photoshop, an idea that rapidly went down in flames.

Demonstrate to the applications software industry how your views can be implemented in a way that promotes their bottom line and perhaps they will give it serious consideration. Until then, however, I believe it will be well nigh impossible to get them on board.

Entertainment content is a different matter because, as you aptly note, scarcity can be identified. The same, however, I do not believe can at this time be said of the software industry. Yes, some software can be leveraged to increase hardware sales, in which case deals can be struck. But what about situations where such leverage is not available? Craft a workable solution and I will certainly give it serious consideration, but until then I have substantial doubts the scarce/infinite distinction will work given the nature of the business.

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

It is useful to note that we are talking about two separate articles, the original with the slides and this. The "cold water" comments have all been directed to the original. It was in this article that detailed information was presented.

Hmm. But those comments still don't make sense. No, I didn't go into nearly as much detail, but I did explain the basis for my reasoning and pointed to earlier articles explaining why this is a bad idea. To suggest I did not do that is simply false.

It is also useful to note that this particular matter is extremely limited in scope; how to go about reconciling the interests of content providers and internet/network providers who to date have been performing a dance around the DMCA "Maypole". Content providers are upset that content is being uploaded/downloaded illegally. Internet/network service providers are upset that they keep receiving takedown notices and have to do something if they are to enjoy the benefits of a safe harbor.

And, again, you leave out consumers. Also, there's a rather simple solution to all of that "dancing around the maypole." Stop doing it. Embrace the business models that are working. Then everyone's happy and there's no reason to negotiate some big agreement.

Done.

I know you have very strong views concerning business models based upon the scarce/infinite distinction. While the distinction is relevant and makes economic sense (even to me), I cannot with certainty state that it is a panacea simply because there are far too many industries and variables for its ramifications to be understood.

I have yet to see an industry that basic fundamental economics does not apply to. If you find one, I imagine it would make for a fascinating research project.

One example that readily comes to mind relates to software companies whose lifeblood depends upon the creation of digital content and its distribution. A company like Adobe seems to me to fit within this group. It is not at all clear just what scarce goods application software providers have than can benefit from the free transfer of their digital products.

We have had this discussion before, and I have provided an answer before, so I'm rather confused by your continued insistence in bringing this up as an example.

But, to be clear, no one is saying Adobe has to change their business model. But we are saying if they don't they'll be in serious trouble (some of which is already occurring). That's because others ARE embracing these models and ARE starting to release products that do at least some of what Adobe does... for free. And that's only going to continue.

There are many paths that Adobe can take, however. Just because you fail to see the scarcities, does not mean they do not exist.

Demonstrate to the applications software industry how your views can be implemented in a way that promotes their bottom line and perhaps they will give it serious consideration.

We are. That's partly how we make good money.

But, honestly, what does this have to do with the proposal at hand? Just earlier you were complaining that we should keep our traps shut on this issue until the adults over at Warner have decided what the screaming children will pay.

And now, rather than explain (as I asked) why you think we need to not express our opinions, you simply change the subject to software -- a different industry with different questions which you and I have discussed elsewhere.

Entertainment content is a different matter because, as you aptly note, scarcity can be identified. The same, however, I do not believe can at this time be said of the software industry. Yes, some software can be leveraged to increase hardware sales, in which case deals can be struck. But what about situations where such leverage is not available?

I have yet to see a market where such leverage is not available. It's more difficult in some markets than others, but it's *always* there. It's the nature of any market that it has both scarcities and infinite goods. But for all the folks who are like you and say "well, we're not going to change until you prove it works for everyone..." there are probably 10 to 100 projects out there that will cannibalize the business models of stubborn companies. You don't need to adapt. But then you won't be in business very long.

Re:

as stated

on another thread I would agree to this but i will add here the following.
this tax /fine MUST COVER EVERYTHING movies, news, games, music, and anything else they may think of.back to square one as this will never happen.

"If Jim Griffin wants us to hold back on criticizing his plan, why can't he and Warner hold back on implementing their plan that effectively blocks out the market forces that are already succeeding?"

Because his definition of "success" is radically different from yours (and mine): for him, success is keeping profits high. He will do and say anything to maintain profits and satisfy shareholders. It's his job.

what music is actually being downloaded?

the question still remains is that how much of the music downloaded over p2p is actually under major label licenses? hype machine estimates that less than 20% of the music streamed via its service is actually major label content, considering they are 80% of the music market, they have a minor market share of music shared online. so why we should be paying them a tax for music that is not theirs?

you can't stop there, what about music that is downloaded from all over the globe, how will an artist in south africa that has their music downloaded by a US college kid get paid?

why we need a music tax, sort of

Background: The music industry had formerly been a musical notes publishing business, then evolved to a record distribution business. Today mass storage and internet are killing the physical record, and thus the music industry as we know it. But there's more music than ever, spread easier than ever. Distributed for free, by using usb-sticks, mp3-players, p2p-software. no problem with that.

Actual Business Model: Billions are made by distributing music (and, movies, games, books) on the internet, for free. Telecom industry revenues, based on the free use (legal or not) of cultural goods. Would you buy a broadband flatrate without abundant free content available? Back in the days musicians were paid poorly by record companies, today they're getting nothing. This is where the "music tax" steps in: Telecoms must be forced to pay a small share to the creative minds.

this is unlikely to happen. i know. but this is a discussion about what should be, not about what will probably be.

disappointed in Ars

I was very disappointed in Ars. Normally they do a good and fair job. It wasn't that they supported the idea, but that they dismissed any disagreement as being a knee-jerk reaction and than went on to support their bias with quotes from everyone that agrees. And they clearly misrepresented techdirt.

It isn't that I expect everyone to agree with me, but at least give fair representation. Ars could have gotten an actual statement from techdirt.

Fair reading, but now you need to explain...

... how this "volunteer license" idea is bad when the cable industry, which you've touted saves consumers per a la carte, is any different?

WE pay a license fee for each station, even those we don't pay for.

Now you're trying to tell us this license for ISPs is a bad idea?

That's basically stating cable is a bad idea.

I'm sorry, but I'm all for $5/mo for ALL of digital distribution (movie, tv, etc) if it gives ME, the consumer, the right to download whatever the hell I want without someone bitching about it.

As for your comments about who's in charge, who gets what, and consumers getting screwed, that's NO DIFFERENT than how it is today.
Who's in charge? Not the consumer, who legally purchases digital content.

Who gets what? Well, this clearly goes to the distributor. Screw everyone else.

Consumers getting screwed? Remember this the next time you mention DRM.

Sorry, but as long as distributors feel they're losing cash (well, any business really), they'll do ANYTHING and propose EVERYTHING to keep the revenue stream going.

As I've said before, Trent Reznor wouldn't be where he is today without the distributors enough to provide you with the notion "freeconomics" works, which is where you'd like to see the digital distributors migrate their business model to.

I hope things change, Mike, I really do, but I still do not believe these "working" business models will be as successful if EVERYONE in the industries does it, destroying distributors in the process.

Re: Fair reading, but now you need to explain...

Twinrova, once again, I must ask that you spend some time trying to understand issues before you comment here, because it makes you look bad every time you speak from a position of ignorance.

... how this "volunteer license" idea is bad when the cable industry, which you've touted saves consumers per a la carte, is any different?

Extremely different. This idea would be required of everyone to participate in. That's not the case with cable. Our problem with the a la carte discussion would be the gov't FORCING cable companies to deliver a la carte. We believe the market can take care of that (and it is -- see our recent posts on a la carte).

WE pay a license fee for each station, even those we don't pay for.

Yes, and that's a voluntary decision you make. You wouldn't have that option under this plan. Do you really not see the difference?

I'm sorry, but I'm all for $5/mo for ALL of digital distribution (movie, tv, etc) if it gives ME, the consumer, the right to download whatever the hell I want without someone bitching about it.

Re: Re: Fair reading, but now you need to explain...

First, there is no ignorance here, but a clear failure to see "apples and apples" because you're too busy trying to push lemons as oranges.

Example: "Extremely different. This idea would be required of everyone to participate in. That's not the case with cable."
Again, explain how it is different? It's not. ALL cable subscribers must pay a fee for channels. Just as ALL those who use an ISP would pay.

"Yes, and that's a voluntary decision you make. You wouldn't have that option under this plan. Do you really not see the difference?"
I think your use on the word "voluntary" is where the ignorance comes into play.
To think consumers have a choice in the cable industry is wrong, as the only choice is "pay or do without". I strongly urge you to view cable tiers and explain to the world how consumers have a choice to get ONE channel without paying for others within the same tier.

If you think for one second we consider this voluntary, you're mistaken. Just as this "tax" would suggest, the voluntary action would be "pay or don't surf the web".

Mike, I get your point the tax is a bad idea, but you're focus seems to be on those who'd get the money, not the consumer. I'll bet if you took a vote and asked consumers if they were willing to pay $5/mo for UNLIMITED downloads of movies, music, etc... they'd say "yes" in a heartbeat without giving a damn to the distribution of the "tax".

Your suggestion states it'll be a bad idea but you seem to ignore the fact what we're dealing with now is absolutely horrid on all levels, well, except for the music industry who continues to reap "taxes" on distribution levels.

Take a re-read of the blog regarding takedowns of movies on streaming websites.

Ironic that cable owners will be "taxed" for this movie because we're paying for it via our monthly fee all the while we can't enjoy it as it was created due to cuts/censorship for television viewing.

I see absolutely no difference here, nor do I with any other industry utilizing the "pay or do without" business models relating to digital distribution.

Re: Re: Re: Fair reading, but now you need to explain...

the voluntary action would be "pay or don't surf the web".
You do realize that there is a LOT more on the web than just their tiny petty content right?
The web is not a content distribution platform. It can be used as such, but that doesn't make up most of the web. Even if you try to view it as a distribution platform, which it is not, these people do not represent ANYWHERE NEAR all content creators. So they have no right to force a "pay or dont use" or "pay or get sued" or anything like that.

Again, saying the consumer might say yes, you do realize these people represent a very tiny piece of information that is on the web, right? Not the whole internet.
Your being here should be enough example of that. So take your 5$, and multiply it by at least a thousand times for every single type of content and all the different groups that represent them so we can actually encompass all creators. So, would you pay 5000$ to actually be able to download everything? I doubt it. And if you try to respond with a person being able to pick specific parts of that massive amuont of content out there, I will respond with Napster. I think it was you I was just saying this to in the previous thread on the proposed tax here. There are already methods where people can pay to download lots of stuff. If that doesn't work, tell them why it doesn't work. Every reason it doesn't work, is the same reasons this would never work. With the main one being they don't represent every single content provider who can use the internet to their benefit.

Also, why even pay 5$ a month for content, when more and more content is being legitimately released for free anyways? As more artists struggle for my attention, more will give their already made music away for free. So why even pay 5$ when it will be free within the next few years here anyways?

Re: Re: Re: Re: Fair reading, but now you need to explain...

"You do realize that there is a LOT more on the web than just their tiny petty content right?"
Sorry, but you're missing the bigger picture here. While not everyone may be online to grab music/movies, people DO hit pages which contain copyright.

Think about this: Every day, people download images from other websites. This is infringement, but you don't hear much news about this. Some websites try to prevent it, only to fail as it's damn near impossible to stop.

Do you think this is okay? What about copying someone else's information for a book report? Do you feel children should be sued for this (even WITH acknowledgment)?

Remember the Harry Potter Lexicon issue? The poor guy lost out and had this "tax" been in place, this type of bullshit lawsuit would go away.

I think you need to re-examine my proposal and understand my stand that a "tax" protects ALL forms of copying, not just music/movies.

"But what about those people who don't download a thing? Should they be 'taxed'?"
Yep. Just like we all "share" in the cost of others for related items, so should they in this "tax".

Here's an example to justify the internet "tax": I pay property taxes, in which 70% funds the public school system. Why should I pay when I have no children going to school?

There are many other "everyone pays" models all over the place, so this shouldn't upset anyone.

What astounds me is how Mike continues to tell us it's a bad idea while wasting no time in telling us the telcos charge EVERYONE for fees which goes into a "big pot" for later spending. Hmmm... tax everyone? HOW DARE THEY!

I'm still waiting for someone to tell me why it's a bad idea. I've yet to see a valid argument of why it is bad.

Re: Re: Re: Re: Re: Fair reading, but now you need to explain...

Yah, but the idea that it would be anywhere near 5$ is crazy. It would be a very large amount. There are too many content people to cover, and they will want too much money.

I think your view of how much is copyrighted and not wanted to be shared is part of the problem with society. Not enough people care enough anymore to share. I program. All of my spare time programs have been shared for free. You don't see me chasing down my friends demanding money now.
As for Mike's comments about the telcos, it is because they are supposed to be using those pools of cash to expand the infastructure, except that they don't, they just pocket the money. And it was partially set up by the government. Universial Service Fund I believe it is called. So they are not doing what they claim to be with the money. And you actually seem to be agreeing there.

I point out theres tons of other stuff on the net, and then you tell ME that I am missing the bigger picture. Once again, another funny statement. I would dare say you are missing the bigger picture. I also think you are very much so overstating how much is copyright infringed on the net.
"Every day, people download images from other websites"
Yah, and most people don't care that their stuff is copied. If they cared, it wouldn't be on the net now would it? The fact that it is impossible to stop just means that technology remains nuetral. It helps those who want to share and want more attetion, and forces those that don't to adapt. That is how I see it.
The largest possible easiest to use and one of the most cost friendly distribution possible platforms, being the internet, is available to these people, and they want to charge for it, rather than use it for publicity.
If they don't want to give away stuff for free in this manner, that is fine, I will continue to ignore them. I will pay attention to those who want me to see and hear their stuff.

OOOOOO, wait, I think I might like your tax idea. I can put up a picture online and then you owe me money just because its online!!!! Suhweeeet.

If you don't see a valid reason by now, you haven't been paying attention. There are just way too many people to pay. Like, just about anyone who has used the net has put up something that can be considered copyrighted. Like my comment. I should get paid for this comment under your view. Or Techdirt should, one of the two, I don't really care who. And most other everyone pays models, people have a choice to. So, I want a choice for this one, and I won't pay it. Simply for the reason I have already mentioned.

Also a huge counter point. You just have to acknowledge this. More and more artists are putting stuff up for free. So why pay? How can you say that is not a valid argument? It is 100% beyond my comprehension how I have said this multiple times and with everything else on this thread you see no argument why the tax is bad. If people are already giving away stuff for free, why set up a tax now? You can ignore the statement this last paragraph makes, but if you do, and say you see no valid counter-argument, then you will just appear ignorant on this one. To me it is the perfect counter-argument. More artists are putting stuff up for free, and I have limited amounts of time. So should I listen to stuff I have to pay for first, or stuff I get for free? Um, free. Thank you, come again.

Re: Re: Re: Re: Re: Re: Fair reading, but now you need to explain...

"I can put up a picture online and then you owe me money just because its online!!!!"
Not unless it's copied, hence the reason for the tax.

But let's focus on this a second with your remark about "too much out there to pay". This is where many of you don't get the difference between my stand and Mike's, so let me try to clarify this once again.

The tax isn't based on one industry. It covers all. This means that, for $5/mo of every user (maybe $10), we can copy anything we want.

The "tax" goes into a big pot. As an artist, you may find you're not getting enough from this tax, or the system is going to fail you tremendously. So, you venture out and begin offering your stuff for free, eliminating any distributor potential which made you famous.

How is this a bad thing? Doesn't this "tax" show a complete demonstration of innovative distribution of artist works?

We clearly see this happening now, and Techdirt helps with it. How many times have we read the "Trent Reznor" example?

And we are all now already paying this "tax" as it is, but you're just not paying close attention to realize it.

But I guess all you out there who believe $0.99/song, $25 movie, or $100/photo, or (etc) is the best solution, because, after all, we all know how these monies aren't being returned to the artist, and why Trent tried something new.

The "More artists are giving their stuff away for free" can also be addressed by the very notion that current system is failing them and more are realizing the potential to advertise for free (their works) to sell the primary source of their business (themselves). It's the entire definition of Mike's "freeconomics" proposal.

However, these FEW ARTISTS WHO GIVE STUFF FOR FREE, doesn't account for the majority who are using distributors who take it upon themselves to create the rules to consumers which artists may (Metallica, Prince)/may not (Trent, Radiohead) agree with.

I strongly believe once this "tax" is imposed, millions will have their eyes opened about the entire concept behind "copyright infringement" and realize it's a stupid concept when it comes to COPYING.

But hell, keep paying the current "tax" for your digital media. Go download all the stuff by those giving it away for free because you're tired of paying for the "tax" others continue to impose.

Digital copying should be free. The entire purpose of creating something is to share it with the world. It's the inept who feel they deserve something for doing the work that's destroying the concept of "copyright infringement".

Ok then, start your campaign to get these and every single other artist and content creator under a single umbrella.
See how well that works out for you.
You have any idea how many mp3 downloading or subscription sites have tried this?
It just doesn't work. You can't get all these people to agree.
And that is still JUST music. Not to mention Everybody else.
It is just wrong to force everybody under a single umbrella with something like this. Not everybody uses the same model. And this type of deal will be trying to force them to. Sure, they can go out and do extra stuff, but this still forces them to be part of it. So, bad idea.

Re: Re: Re: Re: Re: Fair reading, but now you need to explain...

What astounds me is how Mike continues to tell us it's a bad idea while wasting no time in telling us the telcos charge EVERYONE for fees which goes into a "big pot" for later spending. Hmmm... tax everyone? HOW DARE THEY!

What astounds *me* is that Twinrova seems to have been unable to understand the fact that I think such telco fees are a huge problem and should be done away with. So, yes, how dare they?

Re: Re: Re: Re: Re: Re: Fair reading, but now you need to explain...

"fact that I think such telco fees are a huge problem and should be done away with"
Should be doesn't help now, does it. Writing a few lines about these fees on a website doesn't do a damn thing to change the fact consumers are paying these fees.

"Take them away!", you demand. Sure, but here's your new monthly statement with an increase to justify the loss of the tax.

You still just don't get it, do you? We're already paying this "tax" on media now. Read my last comment and you'll see why.

The only difference between the two "taxes" is one comes with the chance of a lawsuit, the other doesn't.

Re: Re: Re: Re: Re: Re: Re: Re: spect (just a little bit)

The point made earlier about performing rights societies such as ASCAP, BMI, and SESAC is worth repeating. These agencies make it trouble-free for broadcasters and businesses to distribute music. And they do a good job of monitoring what's distributed and giving artists a fair share. Frankly, just getting rid of all of the lawsuits, not to mention the awkwardness of finding music online or being able to receive Internet broadcasts, would be worth it.

Re: Re: Re: Re: Re: Re: Re: Re: Re: spect (just a little bit)

These agencies make it trouble free for LARGE members affiliated with the RIAA to acquire revenue, and then pass off a (rather small) proportion to the LARGEST of their signed artists.

These agencies do f**k all for any small artist. There is a wealth of info out there that quite plainly catalogues how the smaller artists subsidise the larger ones and these organisations, because these agencies, the RIAA, and it's members will not pass on revenue below a certain level or value: it just gets thrown into the larger artist's pie or more often, into the RIAA's general revenue.

I and a large number of ppl I know in the industry have experienced exactly this. You clearly haven't.

Amazing

The eloquence in how you explained the situation is amazing. Most people miss the point that the labels are not artists, nor do the labels have the best interests of the artist in mind. The concept of revenue from tangibles has been used for a long time in Japan where piracy is much worse than it is here. Those artists don't seem to be suffering badly. Over all a great article. Hope to see more from you about this issue.

What will the execs get paid ?

Since this would in effect be music welfare, will the music execs take a cut in pay ?
No, I didn't think so either.
Under normal circumstances, the public has little to say about how much the exec staff of a normal company is compensated. However this and similar situations are much differnet and the compensation for all emplyees of said org should be under public scrutiny and not just some public utilities commission either.

So, music execs ... think about it long and hard ... do you really want to give up doing blow off some hookers tits ?

Awesome but . . .

I think this might be better received by opponents and those who "just don't understand" or those who are ignorant, if you swap(mostly) the beginning section with the ending section. I think if they are presented with the clearly superior alternative first, it will prevent misunderstanding due to skimming while also letting you be able to begin and end positively, effectively negating any claim that all you did was "jackboot the music industry in the proverbial groin" again.

John Galt's worst nightmare (crosspost from slashdot.org)

I was listening to the Atlas Shrugged audio book last night, and the unfettered economic chaos it warns about started just like this.
The people who could build things well, the craftsmen that created useful, necessary things, had their profit siphoned off via taxes to those who put out shoddy and useless products.
Eerie.

Re: John Galt's worst nightmare (crosspost from slashdot.org)

I read this recently too. Don't forget the screaming cries of the moochers; "it's not our fault", "things just turned out that way", "i Need a job so I should get one", "you should work, because We(moochers) need you product"..

It does seem like the large recording companies are the moochers and looters to the creative entrepreneurs. The latter group chose to go on strike and starve everyone else out.

As in patent law, if you can innovate, litigate. So in copyright law if you can't create, legislate.

I really disapprove of this

This just really pisses me off because I sure haven't bought a CD in years and don't even listen to the radio or any of the garbage that is being passed off as music these days.

Make decent music, and I'd be willing to pay for it. Until then, I don't want to be charged a license for something I don't even listen to.

And I'd also be upset if one existed for movies or TV. I haven't watched TV in 10 years and I rarely have any interest in movies, if I do, I'll buy the DVD. Don't make me pay for something I have no interest in, thanks. Just because some idiots don't know how to make money doesn't mean I should have to pay for something I'm not interested in.

Early Criticism?

This music tax has floated around a few years. Just because someone in the biz got serious about it perhaps due to the astounding success of the persecution or rather prosecution plan doesn't mean Techdirt was early to criticize anything.

Perfect

"Let the market work its magic" ??

While I understand the concerns you would have about such a tax being enforced by a private company, I think that on principle it's a good thing, and few of your arguments against it are valid. Most are based on your cultural slant that "taxes are evil".

You claim that it would require a huge bureaucracy to monitor downloads. Given that this would be mostly an automatized task, I doubt that it would. It's hopeless to monitor every single downloads, approximative polling would be enough to estimate the respective share of each artists.

But the most striking claim you make is, "let the market works its magic", to which I feel the only reply is, "what's the color of the sky on your planet ?" Because on this one, we're fortunately rediscovering the merits of Keynesian economy, and the "market" is what got the music industry into its current situation.

The market is the reason why more than 50% of CDs are sold in malls, which consider it an "appeal product" (i.e. a product designed to bring the customer in, sold to a low margin), and why small record stores have disappeared (because they don't make "market sense"). So the music industry is forced to produce artists which must be immediately profitable, it's no longer possible to keep an artist afloat for two or three albums, giving him time to mature and grow, knowing his 4th will be a hit. That's not what malls want, and the network of knowledgeable store owners who had a real musical culture which helped these artists to find their audiences and flourish is gone.

Yes, other business models are emerging, but so far artists sustaining themselves out of the music industry are rather the exception than the rule.

The market is a short-sighted beast, culture, musical or otherwise, needs time, and cannot be "evaluated" through money only. Having a global tax to help financing music artists as some form of public service makes sense, even if, mostly for cultural rather than rational reason, it's unlikely to be accepted in the US before long (hopefully we'll have more luck in the EU).

Re: "Let the market work its magic" ??

hopefully we'll have more luck in the EU
Hopefully you won't.
I still stipulate that with more and more artists giving away music, pictures, what have you, for free to promote themselves, why should I pay for those who aren't?
And for those who aren't, if their music is truly great, I will pay for it anyways. If it isn't, just because I downloaded it, I feel they deserve nothing anyways, as their crap was promptly deleted.

Re: Re: "Let the market work its magic" ??

I still stipulate that with more and more artists giving away music, pictures, what have you, for free to promote themselves, why should I pay for those who aren't?
That "more and more" is still tiny fraction of the current market. As for why should you pay, again this is a cultural divide : most european countries don't mind to spend tax money for the common good, we don't think of it in "what's in it for me" terms (although unfortunately this is changing too).
It's better to fund a cultural ecosystem globally than to tie it only to short-term market forces. The market should have an influence too, but the current situation, where crap music and cloned singers are the norm, is what you get when the market becomes too predominant.

Hybrid approach?

I understand and accept the merits of your argument, but I am curious: what do you think of a hybrid approach, perhaps applied only in the interim, in which the tax is applied temporarily while new models are developed/transitioned to (especially given the RIAA's announcement today)?

Personally, I wouldn't mind paying another $5-$10 a month to my ISP/whoever to not have to worry about the source of my music. Then again, I'm not a musician and it's not my livelihood.

"Given the recording industry's history with not being able to "find" some big name musicians, just take a guess how well this will work here?"

Youtube has a counter on their videos telling EVERYONE how many people played a video. Why not put that on downloads. If an artist puts his song on the Internet and wants to get paid per person who downloads, when someone downloads it he can go on the website (as can anyone else) and see how many people downloaded his song. Based on that he can asses how much in royalties is owed to him. He, and anyone else, can ensure that the counter works because the artist can go to the website on another computer and download and see the counter go up. If it doesn't go up, he knows he's being cheated and he can successfully sue for significant damages. If it does go up then he knows he will be payed royalties. Others who download can see the counter move up too and they will notice if there is something fishy going on if the counter doesn't move up when it's supposed to. Of course this could lead to other problems where people create worms that spread and click on a link (changing the URL of course would then be the solution) but these problems can occur with or without a counter. There could also be a problem where the RIAA may lie and say that worms and programs pretending to be users are responsible for a bunch of the clicks when they're not so that they can avoid paying royalties. A solution (for now), of course, is put one of those art pictures with letters where people see an image of letters and have to type it in in order to hear the song.

Re:

and this system even lets people run experiments to ensure integrity. Say an artist in Texas has a cousin in New York. He can call his cousin in New York over the phone, have him click on the link to listen to the music, and see that the click in New York registers on his computer (on the counter, ie: the youtube counter) in Texas. If it doesn't, then we know something fishy is going on and we can put it on blogs and sue. It would be hard for the RIAA to get away with this since everyone and their mothers can run experiments ensuring the integrity of the system with an open counter (like the one we have on Youtube).